Is selling booze one of the things the government needs to do?

With the government facing a huge deficit, perhaps we should not be surprised when Premier David Alward in announcing his choice for president and CEO of NB Liquor also said his government wanted to examine  “the structure and governance of the Crown corporation.” Later, the new President clarified that the government would be studying privatization options.

The decision to start down the road of breaking the government liquor monopoly is a courageous one since it is likely to attract significant criticism. But, properly executed, the move to open competition could bring substantial rewards.

To get a glimpse of what the liquor industry in New Brunswick might look like, without a government monopoly, one need only look west.

After retail liquor sales in Alberta were fully privatized (wholesaling is still run by government), the total number of stores increased. In 1993 (prior to privatization), there were 304 total outlets, today there are 1,726 outlets. The proliferation of stores also increased the total number of people employed in the industry. In 1993, just 1,300 people were in the industry. There are now over 4,000 full and part time jobs.

Also the number of products available increased. Prior to privatization, the government-owned liquor stores offered consumers just 3,325 different products, now consumers can get just about anything they want -- the total number of products on store shelves is 16,495.

All in all, the change was good for consumers and also good for government coffers.

In Alberta, the amount of revenue collected by government from the liquor industry went from about $400 million prior to privatization, to almost $700 million in 2010.

Critics of privatization typically attack on two fronts.  

First, they say alcohol consumption will increase unless the government holds the monopoly. But levels of consumption are almost exactly the same in Alberta as they are in New Brunswick. According to a Canadian Addiction Survey in 2005, the percentage of people having 1-3 drinks a month was approximately 35 per cent in Alberta and 34 per cent in New Brunswick, for those who drink less than once a month its 25 per cent in Alberta and 32 per cent in New Brunswick and those drinking 1-3 times a week its 32 per cent in Alberta and 28 per cent in New Brunswick.

The second concern raised by opponents of privatization is current liquor store employees will lose their jobs to lower wage earners in the private sector.

In British Columbia, private (agency) stores compete head on with government stores, unionized employment remains stable. In Alberta, where sales are fully privatized, layoffs did occur in government stores. However, many employees became more successful by buying the stores they were working in and owning and operating the liquor business themselves -- they knew the business the best.

It’s too bad the debate over privatization was introduced at the same time as David Alward filled the job of president and CEO of NB Liquor with a patronage appointment. An open competition for the job should have been held.  And Daniel Allain, who has a proven record at the Downtown Moncton Business Association, probably would have won the job fair and square.

However, if the government keeps to an agenda of serious reforms to NB Liquor that includes breaking the liquor monopoly and giving more choice, convenience and competition to New Brunswickers, the appointment will end up just a side note in the government’s legacy.